The market may be trading lower today but the same cannot be said for the Novonix Ltd (ASX: NVX) share price.

In morning trade, the battery materials technology company's shares are up 16% to 83.5 cents.

Why is the Novonix share price racing higher?

The catalyst for today's strong gain has been a positive reaction from investors to the release of a big announcement.

According to the release, Novonix has signed a binding offtake agreement with Stellantis.

Stellantis is one of the world's leading automakers and the owner of brands such as Citroen, Fiat, Jeep, Maserati, and Peugeot. The release notes that it has plans to invest more than 50 billion euros over the decade in electrification to deliver on its targets of reaching 100% passenger car battery electric vehicles.

As part of its electrification plan, it has signed up for offtake of a minimum of 86,250 tonnes and up to a target volume of 115,000 tonnes of high-performance synthetic graphite material. The price of synthetic graphite products sold under the offtake agreement will be based on an agreed upon market-based price formula.

Riverside facility

The release notes that the material will be supplied to Stellantis' cell manufacturing partners in North America over a six-year term starting in 2026 from Novonix's Riverside facility and a planned expansion site.

Novonix highlights that its Riverside facility is poised to become the first large-scale production site dedicated to high-performance synthetic graphite for the battery sector in North America. It is expected to begin commercial production in 2025, with plans to grow output to 20,000 tonnes per annum (tpa) to meet current customer commitments.

It was previously selected by the U.S. Department of Energy (DOE) Office of Manufacturing and Energy Supply Chains (MESC) for a US$100 million grant and a US$103 million investment tax credit towards the funding of the Riverside facility.

Novonix's CEO, Dr. Chris Burns, was very pleased with the Stellantis agreement. He said:

We are excited to have Stellantis' commitment, now as our largest customer, to support their North American EV growth plans. This contract allocates the remainder of our available volumes at our Riverside facility and a portion of volumes to be produced at our planned greenfield facility. Offtake agreements with high-quality partners such as Stellantis solidify NOVONIX's position as a leader in onshoring the supply chain of synthetic graphite and accelerating the adoption of clean energy.

The Novonix share price is now in positive territory and up 12% year to date.